Leveraging Growth in a Strategic Way with Roland Frasier

Jake Randall

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The Profit Junkie Podcast – Ep. 008 – Roland Frasier

Jake Randall: Okay. Welcome back to the Profit Junkie podcast where we talk about increasing your sales and making sure you keep as much of your hard earned cash in your bank account as humanly possible. I’m really excited for today’s guest. He is a business growth expert, but a little bit different than a lot of our other guests. He is Roland Frasier, and if you don’t know Roland, he has his hands in about a million things. Roland, welcome to the program.

Roland Frasier: Hey, thanks Jake. Appreciate you having me here.

Jake Randall: Awesome. For those of our listeners who may not know you, I would be surprised if a lot of them don’t already, but why don’t you tell us a little bit about who you are and what you got today, what do you do?

Roland Frasier: Sure. Yeah. I consider myself a strategic investor, so hopefully I am smart money. Sometimes I’m not, I’m dumb money, but it just depends on the case. And so I generally just look for companies typically in the five to $50 million range to become part of. I sometimes do that as sweat equity where I’m just bringing kind of my talents and skills and sometimes I’m an investor of cash as well. And I come in and then the goal is to grow them and ideally in I say three to five years, but it’s almost always five or six years before an exit is possible. Especially because I usually come in and restructure the companies in a way that allows them to have multiple exits and that enables them to receive a lot more for the company than they would if they just sold it as a bundle.

But that’s basically what I do. I’ve done it across a whole bunch of different industries. 24 different industries. I’ve grown 24 different companies past seven figures, 18 past eight figures, four past nine figures, and I’ve got one now we will do about 2.4… It actually will do about 4 billion this year. We did 2.4 last year.

Jake Randall: Awesome. The lesson for me is to think bigger than I am right now.

Roland Frasier: For me too always.

Jake Randall: Isn’t that funny how we set these limits on ourselves and we say like once you break a million, that is not that big of a deal and then the next goal. Funny how that goes, right?

Roland Frasier: Yeah. Somebody said it well one time. They said that in your mind it’s kind of like a thermostat. And so if your thermostat is set at a million and you lose your business or sell it or whatever, getting to a million again is really easy because that’s where you’re set. But as you go over that we have a tendency to not get past and not reset the thermostat. And so we just kind of sabotage ourselves to going back to, “Well, I’m kind of $1 million company guy.” Or, “I’m kind of a a $10 million company person.” Or whatever.

And I thought that was really interesting because it helps me to think, “I need to be here.” I’m resetting that thermostat all the time. And if you’re actively consciously in competence first, right? Oh, wait a minute, I’m thinking I’m a million dollar person, or a 10, or a hundred, then it helps you to not accidentally sabotage yourself into falling back into the thing that you know you can do and reach better and more effectively and efficiently to the place that you have decided you are going to set as the new part on your thermostat. Does that makes any sense at all?

Jake Randall: Yeah, absolutely. Do you find that to be a problem sometimes with the companies that you’re investing in or something you have to coach them through? Are they thinking a lot of times too small or most of the time by the time you invest they’re already thinking big?

Roland Frasier: I think that usually they are thinking bigger, but they haven’t taken the steps or they don’t know how to get bigger. They don’t know exactly what do I do to go from 5 million to 50 or from 50 to a hundred or whatever. That’s the the biggest challenge because it takes different thinking and it frequently takes different people. I think there’s a saying that what got you here won’t get you there. I think that it’s also who got you here won’t get you there. And that’s probably the hardest thing for people is that you frequently need different senior leadership to get to the next place.

Jake Randall: I think that’s really valuable insight on that. I know what I think it is, but I would love to hear from your perspective, what do you think your superpower in businesses is?

Roland Frasier: I think my super power is relationships and to really leverage growth in a strategic way.

Jake Randall: I mean, I’ve heard the stories when you’ve talked at different events and things like that of just creative ways that you’ve been able to put pieces and relationships together that sort of fueled the fire in ways that maybe people weren’t thinking about before.

Roland Frasier: Yeah, I am a creative thinker.

Jake Randall: Where do you think that came from? How did you get your deal making creativity?

Roland Frasier: I never thought about it before. I had a team redo my personal branding website at rolandfrasier.com because it was just awful before and I saw these beautiful sites that they had done for Joe Polish, and JJ Virgin, and these other people. And I was like, “I want a site like that.” And so I found out who did it. And it was really cool. The guy’s name is Dmitri Kozlov and he has this whole thing they call essence extraction. And part of the process, which I thought was to hook you up with this guy named Patrick Coons and Patrick is a origin story extractor. So he sits down with you, and talks to you, and then figures out what’s your origin story. And I mentioned it to him and he came out of it with 50% creativity and 50% business.

And he came to that after talking with me about, “I’m a musician. I played in bands for years. I’ve written songs, I’ve written poems, I’ve written books, so I think I’ve composed music.” All of that. He’s like, “That’s it. That’s why you have a creative artistic side and that’s what makes you different.” And I was like, “That’s actually true.” So I tend to think differently than people who just went through a life of no creativity or got educated in business. And business by the way is designed… Like business education, business school, law, school, accounting. I went through accounting, believe it or not, and got degrees in that stuff… Is designed to, I think, squeeze out the creativity.

Who wants to creative accountant? Nobody, right? You want the accountant who follows rules. Who wants a creative attorney? Maybe a guilty criminal defendant, but not usually business people. It’s like you. You And your business help people creatively look at the tax structure to see where are the opportunities, and that’s unique also because most accountants think only in terms of, “How can I historically present the information of what happened in the business before. And I don’t really care about taxes because the laws are the rules and the rules, they fit into these neat little boxes that people have said and it’s not always that way.” So I think that’s a lot of it.

And then my father who is 86 years old who continues to practice tax law to this day, while he’s not musical or artistically creative, he is very creative in the tax world and it’s really fun to watch. And I grew up watching him work with entrepreneurs. And he was on the IRS side for I think about 12 or 15 years and then moved from the dark side to the light and on the private practice side. And watching him work with entrepreneurs, and negotiate tax settlements, and create solutions to challenges they had tax wise was really helpful too. And he did his tax work on a contingency basis based on a percentage of the savings. Yeah, I think it’s those two things.

Jake Randall: That’s awesome. Your mom didn’t happen to be a musician, did she?

Roland Frasier: My mother was… She did play piano not terribly well. But she was fascinated by Carl Young and psychology and she was just obsessed with all of how does the mind work and things like that, which I kind of caught that from her too.

Jake Randall: Yeah, I was going to make a joke earlier about your dad being a tax accountant and your mom being a musician, but looks like it’s not too far off.

Roland Frasier: It’s not too far off.

Jake Randall: If somebody’s looking at their business and they kind of feel like they’ve got a decent business, but they’re struggling to make sales work, and this kind of a loaded question or maybe a hard question to answer, but what are some creative ways that you’ve found when like, “Go out and sell more.” Is not the answer for a company? Have you found any things that you can jar a company loose from maybe being stagnant or something like that?

Roland Frasier: Yeah, I think. One, the easiest way if you’re constrained by, “Here’s the system that we’ve got.” Then I think I’m going to move because today’s our housecleaning day and I hear a vacuum cleaner coming this way. So I’m going to keep our sound quality up. But I think the biggest thing that you can do is say, “How can we optimize the business?” So what are we going to do to actually improve, to take the best of everything that’s already working and make it work better.

And so I think the way that you do that typically is you say, “Okay, I’ve got, [Susie 00:10:39] is my best salesperson. When somebody comes in, Susie’s able to take a call and get that call to convert and she’s converting at 80%, everybody else is converting at 55%. Then let’s take Susie’s methods, document them, and get the other people trained on that.” And then we lose this many people in this area and this person is performing in this area. And just take your best practices from the people in the systems that you’ve got and apply it uniformly across the business. That’s the easy optimization to increase things. To me, that’s cool and it’s important, but it’s not enough frequently to really like if you want to go… I was talking to somebody today, they’re doing $12 million a year and they’re like, “We want to be at 50 million and a hundred million and then exit as well.” That kind of optimization usually won’t get you to those next levels. Right?

So when you’re talking about how do I get to that, then to me it’s always strategic relationships. So it’s who has big swaths of your customer already that you don’t currently have a relationship with. And so I’ll go through that exercise with people and it’s amazing. I was trying to think of… Who was I talking to? I was talking to somebody today that builds funnels for people. She’s in our war room mastermind and she’s like, “How do I really light it up?” And I said, “Well, what kind of funnels do you build?” And she said, “I build funnels for transformational coaches. People who are changing lives.” And I said, “Okay, well then it’s natural to me where are the big pockets of people.” So I happened to know a lot of people that I can connect people to you. So I said, “What about JJ Virgin? JJ Virgin is a friend and she’s got this amazing Mindshare Summit thing. She has 600, 700 medical and health and holistic practitioners that come and learn from her. And they all need to have funnels built and advertising run. What about her as a strategic partner?”

And then there’s a another lady that does hypnotism training. She trains hypnotists in how to basically have a hypnotherapy practice. And so I said, “Well, what about Grace?” Grace Smith is her name. I said, “What about grace? She’s got all these people.” And we just went through and identified a whole bunch of places that she could go and do this.

Another person that I just talked to recently, I’m trying to think of what their business… They have a financial trading platform, so they basically help people trade stocks and they’re members of the Chicago Board of Options Exchange or whatever the heck that is now. CBOE, I think it’s called. And so I said, “Okay, well who’s your ideal customer?” And they said, “Pilots, attorneys, doctors.” That kind of stuff. And I said, “Fantastic.” “Who has relationships already with those people that you can get with?” And we’re like, “There’s pilots associations, and pilots groups, and there’s bar associations for attorneys. And then there are trade shows for attorneys, and there’s publications for attorneys, and there’s chiropractic associations, by the way, there’s also practice management consultants and things like that.” So we started identifying piece by piece, all of these different places that already have aggregated the customers and are significant centers of influence that would have a business reason for helping those people out and potentially have a financial interest in being able to become an affiliate that can refer things. So that’s it.

And then I talked to somebody today and they said they do aging in place stuff. So they do helping people like beds for the elderly, and homes, and bath benches, and things like that. And they said, “Gosh, the biggest place… ” I said, “Where’s the biggest place your customers are?” And they said, “ARP.” And I said, “Great.” They said, “But it’s $750,000 to place an ad in the AARP magazine.” And I said, “Okay, well, if you don’t want to pay the 750, which might be worth it, by the way, but if you don’t want to pay the 750… ” Then I Googled, “Right for AARP.” And so up came AARP article writing page, “We pay a dollar a word to write articles on this.”

So look, here’s the seven categories that they want. Two of them fit directly into what you guys want to sell. Become a writer for AARP and you will reach that audience. Go to the influencers who are already writing for AARP and see if they have followings or have their own pages because they’ll have access to the people that you want. And effectively AARP might end up paying you to write articles to be in their magazine, which will be better for you than having a big ad that nobody’s going to pay attention to anyway. Does that make sense?

Jake Randall: That’s awesome. I love that. So I have a personal story where we did it kind of on accident and I since learned that lesson, but you just gave me some golden nuggets that are clicking in my mind for more ideas. We did the same thing with like real estate associations.

Roland Frasier: What associations?

Jake Randall: Real estate associations. We went and got relationships with 36 of the real estate associations to joint venture on our product. And then we sat down and we were like, “Wait, that was a pretty good idea. That actually worked.” And then we started going after and that’s that. Now we’re looking at going after people that are in digital marketing and they all have big lists of entrepreneurs. But you’re giving me like… I was already kind of on that split, but you just opened my mind to a whole new level of thinking on that. So that was great information.

Roland Frasier: Awesome.

Jake Randall: It’s kind of a different kind of a question. We always ask this question to our our guests, besides your strategic growth initiatives and things like that, can you name a specific example of something you’ve done in your business to make sure that more of the top line revenue drops to the bottom line as profit?

Roland Frasier: Yeah, I think there’s two major things that a lot of people miss. The first is that we take a portion of our profit from the top. So we do what’s called a top line scrape. We say there’s three partners in one of the businesses. So I’ll give you that as an example. So in that business, we take one point off the top of net sales. So not gross revenue, but gross revenue minus… You’ll like this because you’re an accounting type person, right? Gross revenue minus sales discounts, allowances, returns, charge backs, et cetera, right? So that’s net sales, not net profit, but net sales. And so then when we do that and let’s say there’s $10 million in profit, then we’ll take off $100,000 for each of us off the top, which makes us do better on all the other things. If we know that we’re losing 1% of gross margin up at the top times three, so 3%, then that makes us more careful in how we’re going to do everything else.

Jake Randall: Then the second thing is how can we compress… How can we increase profit margin by pressing the ownership chain through vertical integration? So with that fancy book way of saying is that we buy companies that are in our supply and distribution chain. So we have a product that we are selling and I’ll use since I just mentioned the age and place thing, right? If we’re making a medical bed, for example, then right now we’re buying that from somebody else. So I’m going to look at can we buy the people that we’re buying that from now and then their 15% margin, or 30%, or 50% becomes our margin, right?

Jake Randall: So same thing in supplements. If we’re doing supplements and most of our stuff is direct to consumer, so we don’t really buy distribution like buying a physical store, but what we might buy is we might buy an affiliate that’s really strong. So let’s say that we’re manufacturing a supplement and we’re buying that from a formula. There are formulators that have the wholesale bulk ingredients, and combine them for you, and bottle and produce them for you. Those guys are making a ton of money, so I don’t want to give that margin up. I’m going to go and buy a formulator to fight compressed margins to expand my margin, right?

Roland Frasier: So let’s say maybe I’m making 200% on the supplements I’m selling and they’re making 150% on selling the stuff to me. Now I’ve got 350% instead of 200%. And then down line, maybe I’ve got an affiliate that’s selling the stuff for me and I’m paying them 50% commission on everything they sell, then I’m going to buy that affiliate and then I’m going to own that 50%. So now instead of 200% I’ve got 400%, right? I’ve doubled my margin. So that’s not how I think most people think, but I think that just looking at where is margin slippage.

Margin slippage at the top in manufacturing, which, if you’re not doing physical products, it can be content creation. Are you hiring people to create content for you? Are you buying that from an agency? Whatever stuff you’re getting. Are you doing wholesale publishing deals where you’ve got somebody that creates content and then you publish it and sell it for 15% and pay them a 10 or 15% margin? Which one of the companies that I bought was doing. I’m like, “Why do we do that? Let’s just hire some people.” If you take the dollars that we’re paying out in that to these people and just hire somebody to create the content because it ain’t rocket science, then we save all of that margin up top. We’ve instantly added 15% margin to the top. And then going down the line it’s just a really fast way to improve margins.

Jake Randall: I love it. I love the way you think. I think it really is a unique skill. I think that our listeners are… It’s going to kind of hit them sideways, up the head a little bit. It’s going to be good.

Roland Frasier: But it’s a good way.

Jake Randall: In a really good way. No, it really… I think this is what separates people that are playing small from playing big is that ability to think creatively about the business. Not necessarily about the product or service that they’re offering, but about the actual vehicle that they’re driving, the business.

Roland Frasier: Right. Right.

Jake Randall: I love hearing your war stories.

Roland Frasier: Well, that’s good. We’ll have a drink some time and do that.

Jake Randall: Yeah, that sounds good. I do want to give our listeners… Because it is a little bit different, I do want to direct them over to your podcast. You have a podcast that is really, really great called Business Lunch. Do you want to tell people really quick about what your vision for that podcast is?

Roland Frasier: Yeah, really more than anything, it’s just a way to try to help other entrepreneurs either that are starting out, or that are stuck, or that are successful and looking for other ways to think, like some of the stuff that we just talked about. So I get other people who I know. It’s just kind of in life I’ve got a fairly good stream of really successful entrepreneurs in my immediate circle of friends and acquaintances. So I’ll just reach out to them and say, “Tell me how you got started.” So that anybody that’s thinking, “Well, Richard Branson started with $8 billion.” He didn’t. He started out as a student and he was like, “Here’s a cause I care about. Let’s publish a magazine.” Or Sara Blakely who just had a problem because she didn’t look like she wanted to look in white shorts and with selling fax machines.

It’s to me a way to see, and not only just those big people like that, but people like you and me that have created from nothing. You start from nothing and now you’re at a point where people might look at you and say, “Yeah, but you know all these people are.” Or, “You’re making all this money.” Or whatever. But it wasn’t like that. So it’s we’ve all come from where whoever is listening is right now. And if you’re in a business and you’re kind of stuck, we’ve all had problems where we’re stuck. We’ve all had challenges with partners, we’ve all had challenges with… I mean, you can’t go through your business without all of the bad stuff happening to you especially if you’re in multiple businesses. Your odds of going through everything anybody can think of are pretty high.

And so just talking with these people and sharing their stories, kind of pulling their stories out, and showing what was the entrepreneurial journey, I think, can be really helpful for people. So that’s what that show’s about. And when I was trying to think of what to call it, my wife said, “Well, you’re always having lunch with people when you talk about this stuff, so why not call it Business Lunch?” And I was like, “That’s a really good idea.” So there you go.

Jake Randall: It’s a great podcast. I highly recommend it to our listeners. Go check it out and give it a listen. One last question for you Roland. What is the best advice you’ve ever received when it comes to your business?

Roland Frasier: It’s not just business advice, but it has helped me tremendously in business. And it was from my father, and I’ll show my age a little bit here, but as a very young child… This is how I get around being old. As a very, very young child, practically a fetus, I was watching the challenges that Richard Nixon had when he was being impeached. And I was watching the statement by one of the guys, I think his name was Dean. It was a long, long time ago. But it’s funny this stuck with me. And my dad said this guys was saying all kinds of bad stuff about the ex, the president who was being impeached or whatever. And then they showed Nixon. And Nixon came on and he said… What they were asking, they said, “What do you think about all the things that… ” I think his name was John Dean… ” That John Dean said about you? That you are this awful person and all this stuff.”

And Nixon said, “When people are under stress or they’re mad, they frequently say things that they don’t mean. And I think that’s what happened there.” And my father highlighted that and said, ” That’s some of the best advice that you will ever… ” I get chills thinking about saying that, right? He said, ” That’s some of the best advice you’ll ever hear. When anybody that you’re doing business with that’s a partner, that’s a friend, that’s a spouse or whatever comes under stress, particularly financial stress or something like that, they’re very likely to say things that are hurtful or harmful, but they don’t necessarily mean them outside of the moment and the context they’re saying them in. And that’s been super helpful to me because sometimes people do say things like that. Sometimes people do things that don’t make sense.

And I think having an understanding of looking at things from their perspective and knowing that they may be expressing things that they feel in the moment that they don’t feel most of the time or that they don’t feel deep in their heart is really good to know because it mitigates your level of response so that you don’t get caught up, and you get angry and then you’re like, “Well, screw you.” Or, “I’m going to crush you.” Or whatever. That helps you to remain calm. And if you can remain calm and intellectual, not emotional when you’re responding to stress, or difficult times, or people who are being difficult at the time, then that can save friendships, and marriages, and family relationships, and partnerships, and avoid lots of litigation and things like that. I’ve just found that to be probably the best bit of advice I ever got.

Jake Randall: That’s really great advice. And I know this isn’t what you’re talking about, but I’ve always wondered what it would be like to sit in your board meeting. I know you have a lot of companies, but the one I mostly know is the digital marketer. Because you and your partners are very, very different, I’ve always wondered what that looks like in there.

Roland Frasier: It’s really cool though. I’m very fortunate to have good partners in all the businesses and the one thing that I would tell people is that you don’t want partners that are like you. If they are like you and they have your skill sets, they’re probably not good partners because what are you each bringing to the table? Right? So I like it that I have partners also who don’t like doing the things I like doing and I really don’t like doing the things that they do, but they love doing the things they do.

So it’s the ultimate win because then you’re not sabotaging the things that you don’t like because you’re forced to do these things you don’t like and you’ve got partners that you don’t feel bad about. Like, I don’t feel bad that one of my partners likes to do funnel builds and stuff like that. I enjoy that, but I wouldn’t want to do it all the time. But he loves it. So he’s actually getting to do what he likes to do.

And this is a conversation I have with a lot of entrepreneurs that are stuck because they’re saying, “Well, I want to grow, but I do everything in the business right now.” And I’m saying, “Well then you need to have somebody do the other things. What do you like least?” “Well, I least like doing the accounting.” “Okay, great. If you least like doing that, hire… ” “But then I feel bad because they’re doing this thing that I don’t like.” “Yeah. But they like it.” There are people that actually like accounting. There are people that like to be on stage. There are people that like to travel all the time. There are people that like to stay at home all the time. That’s what’s so amazing. So find the people who have these complimentary skills and desires to yours and that’s the perfect partnership.

Jake Randall: So true. So such good advice. Everybody, i really, again, highly recommend you go check out the Business Lunch podcast. It’s great. Go ahead and follow Roland online. He is a fun guy and you can see all his gallivanting around the globe. And you learn lots of lessons from him. Roland, I really appreciate you making some time to be on our podcast today.

Roland Frasier: Oh, thanks Jake. I appreciate it. It’s nice to be here.

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